Taiwan's IPR Laws:

Taiwan's Effort to Comply with TRIPS by Laura W. Young

Taiwan has steadfastly maintained an optimistic position on joining the World Trade Organization, despite serious political hurdles, such as Chinas strong opposition. Since the late 1980's, Taiwans government has stated that it intended to join GATT. All of Taiwans intellectual property laws have been revised, and new statutes enacted to remedy deficiencies in protection. As of 1996, Taiwan has in place an advanced IP regime that almost completely satisfies the requirements to comply with TRIPs. Some of these revisions are adopted conditional to the WTOs admission of Taiwan.

TRIPs includes eight sets of standards on the availability, scope and use of intellectual property rights: in addition to patent, copyright and trademark, also trade secrets, protection for integrated circuit chips and their design, and protection for geographical appellations, and control of certain licensing practices. TRIPs also establishes general principles for enforcement of intellectual property rights, and sets various rules for administration of TRIPs itself. As Taiwan is not yet a member of WTO, the administrative issues are not dealt with here. Since January, 1996, Taiwan law also provides protection for six types of intellectual property, in a statutory scheme that largely mirrors TRIPs. Taiwan's first Integrated Circuit Chip Protection law was passed in mid 1995, and its first Trade Secrets law was recently promulgated and became effective on January 19, 1996.

I. Guiding Principles

A. National Treatment

TRIPs requires that each member accord national treatment to all other members. Taiwan's current system of Intellectual Property protections is based on reciprocity. However, Taiwan is not a member of any international convention granting MFN to all member nations. As Taiwan is not a nation, and is not recognized diplomatically by any major nation in the world, it is not a party to the Paris, Berne, Madrid, Rome or Washington Conventions. Any granting of MFN with Taiwan is the product of a bilateral treaty. The US and Taiwan have agreed, through the Treaty of Friendship, Commerce and Navigation between the Republic of China and the United States of America (FCN) of 1948, to grant each other MFN treatment for copyrights, patents and trademarks, etc.

The concept of reciprocity is expressed in the various IP statutes. Taiwans Trademark and Patent law grant rights only upon registration, so unless a nation prohibits Taiwan nationals from registering, its nationals can be protected upon registering in Taiwan. Copyright, however is granted upon creation of a work, and does not depend upon registration.The Copyright Law therefore only extends protection to those countries that protect the copyrights of ROC nationals. Nationals of the US, UK, and Spain are allowed copyright protection in Taiwan equal to the protection granted to Taiwan citizens. The nationals of other countries are generally not afforded any protection, although protection may be granted upon a showing that the foreigners government has protected Taiwan copyrights in the past. Works from nations such as Japan which do not protect Taiwan works, are pirated with impunity in Taiwan. This category of work is large and includes Japanese video games, and many European works.

B. Transparency

TRIPs requires that all laws and regulations and judicial decisions of precedential application, as well as administrative rulings, shall be published in the national language so that rights holders can have access to them. Taiwan has long published all new laws and regulations. As a civil law jurisdiction, judicial decisions do not have precedential value unless they are specially designated for that purpose. Taiwan has long published those decisions with precedential value. There is no general practice of Nei-bu or internal regulations that has plagued foreign investors in China in the 1970s and 80s. Taiwan has a well developed legal publishing industry, and access to regulations is rarely a problem.

II. Substantive Law

A. Copyright

TRIPs copyright standards are generally focused on ensuring that the newer

Copyright Law of Taiwan - Article 13 Copyright Law of Taiwan - Article 4 US companies have a safe harbor. Foreign works assigned to US nationals will be protected as the creation of a US national, and enjoy national treatment in Taiwan, as long as the works is assigned to a US national within one year of its creation. Memorandum of Understanding Between US and Taiwan, 1989, ratified by Taiwans Legislative Yuan, April 1993. TRIPs - Article 63

issues and technologies are protected, such as software, rental rights, wireless broadcasting, etc. Taiwan revised its copyright law substantially in 1985, again in 1990 and once again in 1992. Each revision was motivated largely by US pressure and bilateral negotiations with the US. In 1992, Taiwan brought its copyright law into compliance with TRIPs, seeking to establish itself as a responsible and advanced trading partner well ahead of other countries in the region.

TRIPs requires it members to comply with Berne Convention standards. Thus, among the amendments enacted in 1992, was the establishment of the life plus fifty years term of copyright. Works created by juridical entities receive a fifty year term. Works created by a group of authors are protected until the fiftieth year after death of the last surviving author.

Taiwan complies with TRIPs in that computer programs are protected as literary works, and compilation works are protected without affecting the material underlying the compilation. The rental right required by TRIPs extends only to computer programs and cinematographic works, however Taiwan's law is broader and extends the rental right to all copyrighted works.

Taiwan does not, however, specifically provide that the right of fixation of a work is an exclusive right of the creator, although that right is implied in the creation of the work and in the fact that the creator has the exclusive right to perform, broadcast, and reproduce the work.

Due to the great interest in foreign knowledge and technology, Taiwan has long had a very substantial market for translated books. Prior to 1992, translation rights did not belong to foreign authors, although American authors, under the national treatment accorded by the FCN Treaty, did enjoy the right to control translations of their works. However, prior to 1992, the law provided for compulsory licensing of translation works if a translation had not been produced for the Taiwan market within two years of the publication of the work in English. As TRIPs prohibits limitations to exclusive rights. Copyright Law of Taiwan - Article 30 Copyright Law of Taiwan - Article 33 Copyright Law of Taiwan - Article 31 TRIPs text - Article 11 Copyright Law of Taiwan - Article 29 Copyright Law of Taiwan , Article 3: 1 - Work shall mean an original production in the literary, scientific, artistic or other academic domain. Copyright Law of Taiwan - Articles 22 through 29 FCN Treaty, Article 11

which... unreasonably prejudice the legitimate interests of the right holder, Taiwan eliminated all compulsory licensing of translation works in 1992. B. TRADEMARKS

TRIPs requires members to comply with the Paris Convention standards in affording protection to a broad range of signs or marks under a members domestic law. Following US threats to sanction Taiwan for unfair trade practices under the Special 301" investigation of 1992, Taiwan promised to amend its trademark law. The trademark law had been revised in 1985, but it was revised again in 1993 to bring it into conformity with TRIPs. While it largely satisfies the requirements of TRIPs, there are a few areas not addressed or not yet satisfied in practice.

Taiwan has long been a first-to-file jurisdiction, but with the enactment of the new law, Taiwan specifically recognized the rights of bona fide prior users, provided their continued use is limited to those goods or services originally used. Taiwan follows TRIPs in allowing applicants to make registrability depend on distinctiveness acquired through use. Those using their own name, or descriptions of their merchandise, etc. in an ordinary manner on their goods may continue to use that trademark despite the later registration of the same trademark by another party. Another area where Taiwan law does not quite meet the TRIPs standards is in the standard for acquired distinctiveness. TRIPs states that is to be determined by the relevant sector of the public. Relevant sector is an easier standard to meet to establish fame, than the standard Taiwan law states, which is Taiwan consumers. Consequently, trademarks of companies in specialized fields are rarely protected as famous. Only consumer product trademarks, those for food, clothing, and mass market entertainment trademarks have much chance of being protected as famous.

One area where Taiwan has not yet reached full compliance with TRIPs is in meeting the requirement that a combination of colors may constitute a trademark. Taiwan has not quite yet allowed that colors by themselves are protectable. At present they must be part of a word, drawing, symbol or combination thereof, although Taiwans NBS has discussed the possibility of protecting particularly unusual colors in combinations.

Prior to enactment of the new Trademark Law, a trademark could be cancelled for non-use after only two years of continuous non-use. Many foreign trademark holders strenuously objected, as they often filed in Taiwan as a merely defensive measure.

TRIPs - Article 13. Article 23., see footnote 5.

The new Law follows the TRIPs standard of requiring uninterrupted non-use for three years prior to the risk of cancellation. If a mark is cancelled, the trademark holder can then reapply to register. This complies with TRIPS Article 15(3). The TRIPs standard does not favor local over foreign trademark holders, however; many foreign trademark holders are discovering the inconvenience of having to wait even longer now prior to bringing a cancellation action against a local Taiwan company.

While TRIPs includes four detailed and lengthy articles devoted to protecting wine and spirits appellations, Taiwan trademark law does not address the issue. Alcoholic beverages like beer and liquor are widely consumed, but Taiwan does not have a wine industry, and its consumption of wine remains very minimal. Regulations concerning alcoholic beverages are issued by the Tobacco and Wine Monopoly Bureau. Taiwan trademark law merely states that a geographical designation may be deemed distinctive after sufficient use, and that a mark describing place of origin may be the subject of bona fide first user rights even though an identical mark was later registered for the same goods.

C. Patents

TRIPs requires members to protect new designs, and inventions, including both products and processes. Taiwan has traditionally protected inventions, designs, and an in-between category known as Autility models. However, many of the general provisions did not reach TRIPs standards until Taiwans new patent law was

TRIPs Article 15:3: Members may make registrability depend on use. However, actual use of a trademark shall not be a condition for filing an application for registration. An application shall not be refused solely on the ground that intended use has not taken place before the expiry of a period of three years from the date of application. 16 Taiwan Trademark Law - Article 5 Any word, drawing, symbol or combination thereof used in a trademark shall be distinguishable for ordinary consumers can recognize it as representative of the merchandise and differentiate it from the merchandise of another person. Any descriptive name, geographical terminology, individual's name, or any word, symbol, number, or alphabet which identifies the grade or style of a merchandise shall, if an applicant has already used it and it has become a mark identifying the applicant's merchandise in business transactions, be deemed to be markedly distinctive. Taiwan Trademark Law Article 23 Any person who, in an ordinary manner, uses on his merchandise his own name, firm name, or name, shape, quality, function, place of origin or other descriptions of his merchandise shall not be precluded from doing so by another person's right to exclusive use of a trademark; provided the use of his name or firm name is not in bad faith. One who in good faith uses a trademark on the same or similar merchandise before another person's filing of an application for registration of an identical or similar trademark, shall not be precluded from continuing such use because of the other person's right to exclusive use of the trademark; however, his use of the trademark shall be limited to the same merchandise originally designated. The trademark owner may require the user to attach on his merchandise proper indication for differentiation purposes...

promulgated in January 1994. Under the new law Taiwan grants a term of twenty years from the date of application for new invention patents, in accordance with TRIPs.

TRIPs also requires that invention patents be granted without discrimination as to the place of invention...or whether products are imported or locally produced. While Taiwan's law certainly imposes no explicit burden on foreign inventions, Taiwans legislature expressly noted that foreigners obtained the majority of invention patents, and thus criminal penalties for infringement of invention patents benefitted foreigners proportionally more than local citizens. Therefore, the new Patent law eliminated criminal penalties on infringement of inventions, but retained criminal penalties for other types of patents which are mainly held by local citizens. A review of registration statistics indicates possible examiner prejudice against foreign inventions. Were Taiwan to join the WTO, this issue might come to be addressed in that forum.

TRIPs allows members to exclude certain subject matter from patent protection. However, in addition to those exclusions from patentability listed in TRIPs, Taiwan also excludes scientific principles or mathematical methods, rules or methods for playing games and sports, other schemes which can be carried out only by means of reasoning and human memory. This exclusion is similar to the US common law exclusion (mental steps doctrine), but is stated explicitly since Taiwan is a civil law jurisdiction. Although Taiwan law does not currently protect new species of microorganisms, the Patent Law states that one year after GATT TRIPs becomes effective, such new species would become patentable.

TRIPs - Article 33: The term of protection available shall not end before the expiration of a period of twenty years counted from the filing date. TRIPs - Article 27 Legislative Yuan Gazette (Lifa Yuan Kung Pao) , January 1994. Taiwan Patent Law - Article 21 : The following items shall not be granted an invention patent: New species of animals and plants, not including breeding methods for new species of plants. Diagnostic, therapeutic or surgical methods for treating diseases of the human body or animals. Scientific principles or mathematical methods. Rules or methods for playing games and sports. Other methods or schemes which can be carried out only by means of reasoning and human memory.

Contrary to the perception of many, Taiwan's Compulsory Licensing provisions do fall within the scope of TRIPs. TRIPs states that a licensee must make reasonable efforts to obtain permission from the patent holder, unless a national emergency arises. Taiwan's law provides that a compulsory license may only be granted in a case of national emergency, or if a patent holder has been convicted or sanctioned for unfair competition. Such use must be limited to meet the needs of the Taiwan market. It is not clear whether Taiwan meets the requirement that the amount of remuneration provided for such use be subject to judicial review or independent review by a distinct higher authority, since Taiwan's law provides that the Patent Office would decide the issue.

Another area where Taiwan complies with TRIPs is in the statutory protection of process patents. TRIPs requires that the burden of proof on infringement of a process patent be shifted to the accused infringer in certain cases. TRIPs limits

Taiwan Patent Law - Article 78 In order to respond to national emergencies, or to enhance public welfare by using a patent for a non-profit cause, or where the applicant has offered a reasonable price but still cannot obtain a license from the patentee to use a patent, the patent authority may, upon request, grant the applicant special permission to put the patent into practice. The practice shall be mainly for meeting the needs of the R.O.C. market. TRIPs - Article 31 Other Use Without Authorization of the Right Holder Where the law of a Member allows for other use of the subject matter of patent without the authorization of the right holder, including use by the government or third parties authorized by the government, the following provisions shall be respected: (j) any decision relating to the remuneration provided in respect of such use shall be subject to judicial review or other independent review by a distinct higher authority in that Member....Taiwan Patent Law, Article 78. Article 34 - Process Patents: Burden of Proof

For the purposes of civil proceedings in respect of the infringement of the rights of the owner referred to in paragraph 1(b) of Article 28 above, if the subject matter of a patent is a process for obtaining a product, the judicial authorities shall have the authority to order the defendant to prove that the process to obtain an identical product is different from the patented process. Therefore, Members shall provide, in at least one of the following circumstances, that any identical product when produced without the consent of the patent owner shall, in the absence of proof to the contrary, be deemed to have been obtained by the patented process: (a) if the product obtained by the patented process is new; (b) if there is a substantial likelihood that the identical product was made by the process and the owner of the patent has been unable through reasonable efforts to determine the process actually used.

Any Member shall be free to provide that the burden of proof indicated in paragraph 1 shall be on the alleged infringer only if the condition referred to in sub paragraph(a) is fulfilled or only if the condition referred to in sub paragraph (b) is fulfilled.

In the adduction of proof to the contrary, the legitimate interests of the defendant in protecting his manufacturing and business secrets shall be taken into account. this requirement to cases where infringement is highly likely: only where the product obtained by the process is new, and if there is a substantial likelihood that the identical product was made by the patented process, and the patent holder has unsuccessfully used reasonable methods to try to determine if there is infringement. Taiwan law creates a presumption that an identical product to the process patent. If the manufacturing process was not known anywhere in the world prior to the patent application is made by infringing the process patent. If the defendant in an infringement suit demonstrates that identical articles can be made by another process, the presumption is deemed rebutted. The law does not require that the infringer must prove that he used a different method, merely that a different method could be used. The purpose of this provision is stated to be the protection of trade secrets and legitimate interests of the accused. In practice, however, legal action on process patents remains extremely problematic.

D. Other Statutes: IC Chip Protection, Trade Secrets

1. Layout Designs of Integrated Circuits

In July, 1995, Taiwan promulgated its Integrated Circuit Chip Lay-out Design Law. The statute complies with TRIPs requirements, and grants a ten year term of manufacturing and business secrets shall be taken into account.

Article 91 If an article made by the use of a manufacturing method patent was not known to exist anywhere in the world prior to the application of the manufacturing method patent, then identical articles manufactured by another person shall be presumed to have been manufactured by the use of the said patented method. The presumption referred to in the preceding paragraph may be overturned by presenting rebutting evidence. If evidence can be provided to prove that identical articles can be manufactured by methods other than the patented one, the evidence shall be deemed as rebutting. The legitimate rights and interest associated with the manufacturing and business secret disclosed by the rebutting evidence shall be fully protected. TRIPs, Article 36: Subject to the provisions of paragraph 1 of Article 37 below, Members shall consider unlawful the following acts if performed without the authorization of the right holder: importing, selling, or otherwise distributing for commercial purposes a protected layout design, an integrated circuit in which a protected layout design is incorporated, or an article incorporating such an integrated circuit only insofar as it continues to contain an unlawfully reproduced layout design. TRIPs Article 38: 1. In Members requiring registration as a condition of protection, the term of protection of layout designs shall not end before the expiration of a period of ten years counted from the date of filing an application for registration or from the first commercial exploitation wherever in the world it occurs.

Protection from the date of application on original IC chip lay outs, or of the first commercial use, whichever first occurs. The statute prohibits unauthorized sales, importing, distribution of IC chips, chip layout designs, or an article incorporating such an IC chip. However, TRIPs also requires that members shall not hold someone liable for infringement if they did not know, or had no reasonable grounds to know that a chip or an article incorporating the chip, infringed on the layout ownerss rights. Such an innocent infringer is liable for a sum equivalent to a reasonable royalty. Taiwan law contains a slight variation on the royalty requirement for innocent infringers. Under Taiwan law, such liability only accrues after notice of the infringement. Whereas TRIPs establishes a type of strict liability to protect chip design owners, Taiwan imposes an intent requirement before damages even equal to a reasonable royalty accrue.

2. Trade Secrets

In order to receive protection, TRIPs requires that commercial information be not generally known among or readily accessible to persons within circles that normally deal with the kind of information in question..., have commercial value, and be the subject of reasonable steps to maintain secrecy.

2. In Members not requiring registration as a condition for protection, layout designs shall be protected for a term of no less than ten years from the date of the first commercial exploitation wherever in the world it occurs....Taiwans IC Chip Layout Design Law, Article 19 Id., at Article 2. Id, at Article 37: 1. Notwithstanding Article 36 above, no Member shall consider unlawful the performance of any of the acts referred to in that Article in respect of an integrated circuit incorporating an unlawfully reproduced layout design or any article incorporating such an integrated circuit where the person performing or ordering such acts did not know and had no reasonable ground to know, when acquiring the integrated circuit or article incorporating such an integrated circuit, that it incorporated an unlawfully reproduced layout design. Members shall provide that, after the time that such person has received sufficient notice that the layout design was unlawfully reproduced, he may perform any of the acts with respect to the stock on hand or ordered before such time, but shall be liable to pay to the right holder a sum equivalent to a reasonable royalty such as would be payable under a freely negotiated licence in respect of such a layout design. Taiwans IC Chip Layout Design Law, Article 31. TRIPs, Article 39, Paragraph 2. Natural and legal persons shall have the possibility of preventing information lawfully within their control from being disclosed to, acquired by, or used by others without their consent in a manner contrary to honest commercial practices so long as such information: * is secret in the sense that it is not, as a body or in the precise configuration and assembly of its components, generally known among or readily accessible to persons within the circles that normally deal with the kind of information in question;

Taiwan just promulgated its first Trade Secrets Law in January 1996. Its short statute meets these simple requirements. TRIPs also requires that member governments are required to protect such data submitted to government agencies. There is an exception where a government agency has obtained undisclosed data as a condition of approving the marketing of pharmaceutical or agricultural chemical products utilizing new chemicals. In such a case, where necessary to protect the public, a member is permitted to make disclosures. Taiwans law grants government agencies much more leeway: No governmental employee shall use or disclose without due cause any trade secrets of others known or obtained through his official duties. Not only is the phrase without due cause vague and subject to interpretation in favor of the government, it applies to any and all government agencies.

III. Enforcement

While Taiwan has created a full statutory scheme to comply with TRIPs, there will probably be many debates in the future over whether Taiwan has complied with some of the general language in the enforcement section of TRIPS. The enforcement provisions of TRIPs are very general. Taiwan has long had a well developed legal system, including provisional remedies, compensatory and injunctive remedies. The system has long applied to intellectual property matters, so that Taiwan met this requirements of TRIPs even before TRIPs was drafted.

In some of the general language, however, there lays the seed for future controversy.

*Has commercial value because it is secret; and * has been subject to reasonable steps under the circumstances, by the person lawfully in control of the information, to keep it secret. Taiwans Trade Secrets Law, Article 2. TRIPs, Article 39, Paragraph 3. Members, when requiring, as a condition of approving the marketing of pharmaceutical or of agricultural chemical products which utilize new chemical entities, the submission of undisclosed test or other data, the origination of which involves a considerable effort, shall protect such data against unfair commercial use. In addition, Members shall protect such data against disclosure, except where necessary to protect the public, or unless steps are taken to ensure that the data are protected against unfair commercial use. Taiwans Trade Secrets Law, Article 9. Article 41 1. Members shall ensure that enforcement procedures as specified in this Part are available under their national laws so as to permit effective action against any act of infringement of intellectual property rights covered by this Agreement, including expeditious remedies to prevent infringements and remedies which constitute a deterrent to further infringements. These procedures shall be applied in such a manner as to avoid the creation of barriers to legitimate trade and to provide for safeguards against their abuse...

For example, TRIPs requires that procedures for enforcement of IPR... shall not be unnecessarily complicated or costly or entail unreasonable time limits or unwarranted delays. However, within the past year, some Taipei prosecutors have begun demanding that powers of attorney must be executed by only the President of a foreign company. Given that a Amanager of a local company is deemed authorized to execute a power of attorney, the prosecutors refusal to accept powers of attorney by Executive Vice Presidents of a foreign company is unfair, and can be considered Aan unnecessarily complicated or costly as a foreign company tries to chase down its frequent-flier President. In addition, with the short deadlines sometimes given, say one week, to obtain such a power of attorney, is an unreasonable time limit.

TRIPs requires that courts be authorized to enter default judgments. Courts should have the authority to make preliminary and final determinations... on the basis of the information presented to them, including the complaint or the allegation presented by the party adversely affected by the denial of access to information...

While Taiwan courts have this authority - and thus Taiwan complies with the requirements of TRIPs, in practice default judgments are rarely entered. In practice, judges are loath to convict a party (usually a local defendant) who fails to produce requested evidence. Generally, a wide variety of ridiculous excuses is accepted for a defendants failure to produce evidence necessary to decide issues such as damages. If Taiwan were a member of the WTO, this is a practice that other WTO TRIPs Article 41, paragraph 2. Procedures concerning the enforcement of intellectual property rights shall be fair and equitable. They shall not be unnecessarily complicated or costly, or entail unreasonable time limits or unwarranted delays. Article 43 - Evidence of Proof 1. The judicial authorities shall have the authority, where a party has presented reasonably available evidence sufficient to support its claims and has specified evidence relevant to substantiation of its claims which lies in the control of the opposing party, to order that this evidence be produced by the opposing party, subject in appropriate cases to conditions which ensure the protection of confidential information.

2. In cases in which a party to a proceeding voluntarily and without good reason refuses access to, or otherwise does not provide necessary information within a reasonable period, or significantly impedes a procedure relating to an enforcement action, a Member may accord judicial authorities the authority to make preliminary and final determinations, affirmative or negative, on the basis of the information presented to them, including the complaint or the allegation presented by the party adversely affected by the denial of access to information, subject to providing the parties an opportunity to be heard on the allegations or evidence. Members would likely ask Taiwan to improve.

However, issues such as this are a matter of general practice and individual action, and will be resolved in future years as Taiwans role in world trade grows. Taiwan has made a good effort to comply with TRIPs and shown itself to be a responsible trading partner, at least on the diplomatic level. Taiwan has successfully reduced piracy from early 1980's levels, when it was known as the Pirate capital of the world to now, when it is the host of the worlds 4th largest international book fair, and a successful producer of many original books, software products, and electronics. Given this success, it is not unreasonable to be optimistic about its ability to be a successful member of the WTO, if given the chance.

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